The global economy may take a smaller hit from the coronavirus recession in 2020 than was once expected but faces significant long-term challenges that will likely widen inequality, the International Monetary Fund (IMF) said Tuesday.
In a set of new projections, the IMF slightly upgraded its outlook on the 2020 economic decline while warning that a lack of further fiscal and monetary support could cause deeper damage to the global economy.
The IMF now expects global growth in 2020 to fall to -4.4 percent, 0.5 percentage points better than its June projection of -4.9 percent. The international lender expects growth to rebound to 5.2 percent in 2021, down 0.2 percentage points from a June a projection of 5.4 percent.
“As a result of eased lockdowns and the rapid deployment of policy support at an unprecedented scale by central banks and governments around the world, the global economy is coming back from the depths of its collapse in the first half of this year,” wrote IMF chief economist Gita Gopinath in a Tuesday article.
“This crisis is however far from over,” she continued. “The ascent out of this calamity is likely to be long, uneven, and highly uncertain.”
The global economy has gradually rebounded from the onset of the coronavirus pandemic earlier this year, which caused the steepest economic decline since the Great Depression.
Employment and global economic activity has begun to recover as countries adapt to life amid COVID-19, which has claimed more than 1 million lives globally and more than 215,000 in the U.S.
Gopinath wrote that “signs of a stronger recovery” in the third quarter warranted the IMF’s slight upgrade to its forecast. But she warned that the total economic blow of the pandemic would linger for years and restrain the recovery for long after 2020.